I am still a little confused as to why the $809 refund check is mine to cash. This tyro uses TurboTax and the original 1040 showed a $809 refund. The 1040X showed $540 due the IRS. Clearly a swing of $1349.

Yet, if the $809 refund is mine to keep (and spend) then the "swing" is only $540.

You're confusing yourself through your insistence on looking at checks rather than tax. Your original return understated your tax by $540 (line 10 of the 1040X). Thus you owe $540. Everything else is just reconciling payments.